Private sector death knell for enterprise agreements

Centre director Jim Stanford said the dire ­numbers “confirm, to my mind, that the current system is not compatible with viable collective bargaining in most private sector workplaces”.

The Australian, December 12, 2018

Enterprise agreement coverage across the private sector could fall below 2 per cent of workers by 2030, resulting in the “near dis­appearance” of private sector enterprise bargaining if current trends continue, analysis by the Centre for Future Work at the Australia Institute finds.

The report by economist Alison Pennington documents the rapid decline in enterprise agreement coverage in the private sector, falling from 19 per cent in 2013 to 12 per cent last year.

Since 2013, 662,000 workers have lost agreement coverage, and the number of current agreements has dropped by 46 per cent.

Ms Pennington said the rapid decline reflected a “perfect storm”: many existing agreements not being renewed when they expired; the number of newly negot­iated agreements falling dramat­ically from about 2000 in 2010 to only 68 last year; and a “massive ­acceleration” in agreement ­terminations.

Key factors contributing to the fall in coverage included deunion­isation, unlimited legal protection for “free-riding” by workers who receive better pay and conditions secured by unions but don’t pay union membership dues, longer approval times at the Fair Work Commission, and a shift in employer attitudes to agreement-making.

The report projected the future decline in the number of current private sector agreements and the proportion of private-sector workers covered, based on trends since 2013.

“If the underlying negative trends in agreement renewal and new agreements continue, less than 1700 private sector enterprise agreements would remain current in 2030, a decline of over 90 per cent from (the) end (of) 2013,’’ the report found.

“And the proportion of private- sector employees covered by a current enterprise agreement would fall to below 2 per cent. In short, the destructive arithmetic implied by the failure to renew existing enterprise agreements with private employers, and the failure to negotiate new ones, will lead to the near-disappearance of enterprise bargaining as a tool for determining wages and working conditions in Australian businesses.”

Centre director Jim Stanford said the dire ­numbers “confirm, to my mind, that the current system is not compatible with viable collective bargaining in most private sector workplaces”.

“It isn’t an exaggeration to say that if current trends continue, we are facing the virtual extinction of collective bargaining in Australia’s private sector,’’ he said.

He said public sector enterprise bargaining has been more ­stable for a number of reasons including the much larger average size of agreements, “somewhat less ­virulent hostility” from employers, and different economic conditions.

“But how long public sector collective bargaining would continue, if it is wiped out in the private sector, is uncertain,’’ he said.

“It would be hard to sustain the social and political legitimacy of bargaining in public sector workplaces if the practice becomes extinct in the private sector.”